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Dispelling Competition Myths: REITs Discuss the Advantages They Bring to the Self-Storage Market

Marr: It really depends on the market and, more important, the specific locations of the independent operator’s facilities and the depth of their portfolio footprint. A location on the corner of Main and Main will continue to benefit from significant drive-by traffic despite the growing importance of the Internet in attracting customers. A location one block off the main drag will find it increasingly difficult to compete as customers are no longer able to find the facility through conventional marketing channels such as the Yellow Pages.

Facilities without prime locations can still do well, but it takes a sophisticated online presence and a concentrated portfolio of assets that affords economies of scale in marketing expenditure. Some independent operators have the scale and sophistication necessary to compete toe to toe with the REITs in their respective markets, but most do not.

Do you feel your company is often viewed as “the bad guy” simply because it is a big player in the business? If so, how does your company respond to this perception?

Doll: How we are viewed should not be based on size. All we can do is provide each customer with great service, many choices and a positive storage experience. If we do all of those things, our perception will be positive.

Halverson: Competition is healthy. It is the key component of any free-market system. Obviously, the larger you get, the more people you will compete with. We welcome healthy competition and would hope that other operators also see it as a driver to become the best at what we do.

Marr: I don’t think we are viewed as “the bad guy,” but we are undoubtedly viewed as “the big guy” by some small operators with whom we compete. We compete fairly, but we are unabashed about our intent to compete effectively and take market share. This is the essence of healthy business competition.

Our message to smaller operators who may be struggling to compete is that this industry is still profitable enough for many operators. But as the economics become less and less attractive for the smaller players, we think there are very attractive opportunities for them to view us as a partner, either through disposition or third-party management.

How does your team interact with residents and other self-storage operators in new markets you enter?

Doll: We have generally expanded into markets where we already have an existing presence. Again our goal is to provide the best product, the best price and the best service, and if we do those things well, the consumers will interact very positively.

Marr: We become an engaged member of the community. We start by providing a valuable service to local residents. Importantly, with CubeSmart’s enhanced service model, we are offering a level of service that exceeds the customer’s expectations for self-storage, so we spend a great deal of time educating customers about the many ways in which we are raising the bar for them.

Also, when we enter a community, we want the community to be proud of the asset we are operating, so we meticulously maintain the condition and appearance of our facilities. With other operators, we often exchange customer and market insights and operational updates through an open dialogue. We view our peers as competitors rather than enemies, and we approach these relationships as such.